Russia's Secret Weapon in the New Cold War (Hint: It's Not Oil)
It’s clear to see who’s the new ruling force in Russia. Months ago we knew Vladimir Putin was going to be installed as the prime minister of Russia when his presidency officially ends. The whole time though, Putin promised not to change the balance of power between president and prime minister.
We just received news, however, that Putin will also be the head of the United Russia party, and we finally see how he is securing his political powerbase. The United Russia party is the political party of the oligarchs and controls a dominant 315 of 450 seats in the lower house.
With his power now completely secure, it’s time for Putin to get back to expanding Russia’s international political clout. To do that, he is taking the steps to create another weapon in the country’s resource arsenal. Russia has already established itself as a significant player in oil and natural gas, and that it won’t shy away from using its natural resources to get what it wants. Now, Russia is making its move in agriculture.
Last week, Deere (DE:NYSE) announced it will be investing $80 million into a new production, distribution and training facility in Russia.
Also, last week concluded the privatization of Russia’s vast potash resources. The value of potash, a critical element of fertilizer for crops, has more than tripled in recent years.
As one of his last acts as president, Putin is allowing Russia to capitalize on its vast potash resources. During an auction in which the country sold development rights to three potash projects, each contract went to Kremlin-friendly Russian companies for about $1 billion apiece.
That’s not all. Putin has already given the go-ahead for hundreds of millions of dollars of foreign investment to be applied toward the country’s extremely underdeveloped agriculture lands in the south.
Before he steps down officially, Putin has laid the base for his country to capitalize on the world’s worsening agriculture and food shortage. In the process, Russia has now become a net exporter of wheat after decades of being a net importer.
It has now added another arrow (one more important than oil or natural gas) in its quiver of natural resources, and Russia is working its way to becoming the new breadbasket of the world.
It’s clear to see who’s the new ruling force in Russia. Months ago we knew Vladimir Putin was going to be installed as the prime minister of Russia when his presidency officially ends. The whole time though, Putin promised not to change the balance of power between president and prime minister.
We just received news, however, that Putin will also be the head of the United Russia party, and we finally see how he is securing his political powerbase. The United Russia party is the political party of the oligarchs and controls a dominant 315 of 450 seats in the lower house.
With his power now completely secure, it’s time for Putin to get back to expanding Russia’s international political clout. To do that, he is taking the steps to create another weapon in the country’s resource arsenal. Russia has already established itself as a significant player in oil and natural gas, and that it won’t shy away from using its natural resources to get what it wants. Now, Russia is making its move in agriculture.
Last week, Deere (DE:NYSE) announced it will be investing $80 million into a new production, distribution and training facility in Russia.
Also, last week concluded the privatization of Russia’s vast potash resources. The value of potash, a critical element of fertilizer for crops, has more than tripled in recent years.
As one of his last acts as president, Putin is allowing Russia to capitalize on its vast potash resources. During an auction in which the country sold development rights to three potash projects, each contract went to Kremlin-friendly Russian companies for about $1 billion apiece.
That’s not all. Putin has already given the go-ahead for hundreds of millions of dollars of foreign investment to be applied toward the country’s extremely underdeveloped agriculture lands in the south.
Before he steps down officially, Putin has laid the base for his country to capitalize on the world’s worsening agriculture and food shortage. In the process, Russia has now become a net exporter of wheat after decades of being a net importer.
It has now added another arrow (one more important than oil or natural gas) in its quiver of natural resources, and Russia is working its way to becoming the new breadbasket of the world.
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